Intense Heating in Bitcoin Market is Less Intense than Previous Correction Stages
The cryptocurrency market is currently experiencing a period of consolidation, with Bitcoin trading at £118,000 as of today. Despite this, analysts are warning of a potential short-term dip in the world's largest digital currency.
According to CryptoQuant and other experts, Bitcoin may be approaching a critical juncture. Yonsei Dent, a CryptoQuant analyst, points to the Bitcoin MVRV 365-day moving average ratio nearing a historical peak zone. This suggests that the current cycle may be nearing its peak, possibly by late August or early September, implying a short-term market top and potential correction.
The MVRV ratio tracks the unrealized profits of holders, and when it peaks, it often signals market overheat and the risk of a pullback. Dent advises caution and risk management during this period.
Despite the potential short-term weakness, institutional investors and "smart money" are actively accumulating Bitcoin. This accumulation underpins the current price structure, indicating a longer-term bullish outlook. The accumulation suggests that Bitcoin could target new highs between £140,000 and £200,000 later, provided favorable regulatory and macro factors persist.
However, some caution emanates from on-chain data indicating "froth" in derivatives markets due to elevated open interest, which can increase volatility and risk of sudden pullbacks in the short term.
Despite the potential dip, Bitcoin is currently testing a key resistance level, according to Bitcoin Vector. This testing is part of a healthy cycle, as CryptoQuant believes that the current overheating is smaller in scale and duration compared to previous cycles.
In summary, while Bitcoin may face a limited short-term dip in the near future, the overall outlook remains bullish. Traders should balance optimism with prudent risk management during this phase, as any pullbacks may present buying opportunities. Matrixport has warned of a potential pause in Bitcoin's rally due to upcoming key macro events, such as Fed decisions and a White House report. As long as Bitcoin holds this range, it could signal the start of an uptrend in the second half of 2025, under favorable macroeconomic conditions and market sentiment.
Bitcoin's MVRV 365-day moving average ratio, as per CryptoQuant analyst Yonsei Dent, is nearing a historical peak zone, potentially indicating a short-term market top and correction, as the current cycle may be nearing its peak. On the other hand, institutional investors and "smart money" are actively accumulating Bitcoin, underpinning the current price structure and suggesting a longer-term bullish outlook, with Bitcoin potentially targeting new highs between £140,000 and £200,000 later.
